A mortgage loan is a form of financing for your personal or business purposes. The special feature of a mortgage loan is the security that you must provide in order to be able to use the loan. You can easily use the property you own to raise financing for a property you plan to buy or to fulfill your business requirements. There are several circumstances in which you need to attract outside financing. Banks and financial institutions offer a variety of financing options for you to choose from. With competitive interest rates and flexible repayment terms, you can get a loan for both personal and business purposes. You can use a mortgage loan to expand your business, purchase machinery or installations, project financing, purchase new real estate, expand the market.
Since it is a secured loan, it is essential to pledge a home against this loan. You can take out a mortgage on your vacant property and raise financing for it. It can be any property you own and the loan amount will be secured against the property that is mortgaged meaning you can get a higher loan amount. The real estate can be a land, building, apartment, commercial property, factory, shop, farm, hotel, guest house, nursing home or industrial property. A mortgage loan can be customized according to your requirements and comes with various benefits such as a lower interest rate, a higher loan amount and a longer term. Furthermore, business entities and the self-employed can claim tax benefits.
A mortgage loan is available to business entities, merchants, service providers, manufacturers and the self-employed. For a mortgage loan, the applicant must provide proof of income, proof of identity and proof of address. In addition, it is important to submit documents of the property and also ensure that the property is insured against hazards such as fire. In the case of joint ownership of a property, the co-owners become co-applicants of the loan. The value and age of the property are the main criteria for loan approval. Based on the same, and the market value of the property, the loan is sanctioned. Once the application has been processed, the bank or financial institution will appoint an appraiser who will determine the market value of the property and based on that, the amount borrowed will be sanctioned. Usually 60% of the property’s value is sanctioned as a loan amount. The term of this loan is longer due to its higher value and this allows the borrower to repay it in regular installments over time. It comes with a flexible term of up to 180 months and a loan amount of up to Rs.15 crore.
With a secured loan it is important to pay the installments on time. Since the real estate is mortgaged to the Bank, the Bank can transfer the ownership in case of regular default of the installments. The bank will also issue a demand for payment and if the same defaults again, the bank will have to auction the property and you could lose ownership of it. It is therefore very important to ensure that the repayments are made on time. It also offers the option of early repayment of the loan before the repayment schedule expires. This option saves you interest payment and also gives you a positive credit score. Individuals with a satisfactory or positive credit score can easily have their loan processed.
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